ADP 1998 Annual Report Download

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Automatic Data Processing, Inc. 1998 Annual Report
PEOPLE.
PRODUCTS.
SOLUTIONS.
OUR COMMITMENT
TO ACHIEVING
WORLD CLASS
SERVICE.
®

Table of contents

  • Page 1
    Automatic Data Processing, Inc. 1998 Annual Report PEOPLE. PRODUCTS. SOLUTIONS. OUR COMMITMENT TO ACHIEVING WORLD CLASS SERVICE. ®

  • Page 2
    ... Rico; Loma Bhatia, Vice President of Development, Brokerage Services - Jersey City, NJ; Roxanne Sue, Director, Product Services - Canada, Employer Services - Toronto; Kevin McCrowe, Regional Sales Manager, Emerging Business Services, Employer Services - Long Island, NY; Kevin Lombardi, Strategic...

  • Page 3
    ... property and casualty insurance carriers in North America and Europe, 13,000 collision repair centers and over 3,000 auto parts recycling facilities. TABLE OF CONTENTS FINANCIAL HIGHLIGHTS LETTERS TO SHAREHOLDERS EMPLOYER SERVICES BROKERAGE SERVICES DEALER SERVICES CLAIMS SERVICES INTERNATIONAL...

  • Page 4
    ... with the acceleration of our internal growth rate in Employer Services (ES), ADPÂ's largest Â- and oldest Â- business. With strong sales and improved client retention, our ES internal growth rate increased by about 3% to 14%, our biggest uptick and best growth rate in several years. With this...

  • Page 5
    ... Bank of CanadaÂ's $50 million payroll and human resource services solidifies our position as the premier provider of payroll, human resource, and related employer services in Canada. The acquisition of a majority interest in a $60 million provider of payroll, human resource and accounting services...

  • Page 6
    ... Executive Committee, 1999 will mark my first ADP year in a very long time when I am neither Chairman nor CEO nor COO. For years, I temporarily carried the overblown title of Â"Chairman, President, Chief A Executive Officer, and Chief Operating OfficerÂ" as Art Weinbach, Gary Butler, and I moved...

  • Page 7
    ... largest business Â- Employer Services (ES) Â- contributes more than half of ADPÂ's revenues. ES provides a comprehensive range of payroll, human resources, benefits administration, time and attendance, and tax filing and reporting services to more than 400,000 employers in the United States, Canada...

  • Page 8
    ... FORMS AND AGENDA FOR THE CLIENTÂ'S UPCOMING 401(K) ENROLLMENT MEETING ARE READY. The Electronic Services Division supports all market segments with products designed to complement payroll and HR services Â- from time and attendance tracking to 401(k) processing. ADPÂ's TotalSource SM business...

  • Page 9
    ...Royal BankÂ's 15,000 clients makes us the largest payroll outsourcer in Canada, and positions us well for future growth in that market. Our acquisition of a Brazilian computing services company enables us to deliver employer services solutions to many businesses in Brazil, the worldÂ's ninth-largest...

  • Page 10
    ... communications services, serves more than 14,000 publicly-traded companies on behalf of more than 800 brokerage firms and banks, and 450 mutual fund families. This year, ICS signed contracts with Merrill Lynch, Prudential Securities and Paine Webber, while adding 80 other new clients. We processed...

  • Page 11
    ... OF SANTA CLARA, CA, WAS ONE OF THE FIRST COMPANIES TO USE OUR NEW INVESTOR COMMUNICATIONS SERVICES (ICS) INTERNET SERVICE TO ELECTRONICALLY VOTE PROXIES. CARY I. KLAFTER (LEFT), INTELÂ'S DIRECTOR OF CORPORATE AFFAIRS AND SENIOR COUNSEL, DISCUSSES THE BENEFITS OF ELECTRONIC DELIVERY OF SHAREHOLDER...

  • Page 12
    ... in North America, Europe and Latin America use ADPÂ's on-site systems and communications networks to manage sales and operations. In Â'98, Dealer Services revenue increased 7% and client retention exceeded 95%. ADP continues to be the leading provider of computer systems and services to dealerships...

  • Page 13
    ...), ADP SR. CLIENT TECHNICAL ANALYST, REVIEWS HOW TO STANDARDIZE APPLICATION SET UP AND TRAINING WITH BRAD WILLINGHAM (LEFT), INFORMATION TECHNOLOGY DIRECTOR, M.F. SALTA COMPANY, AN ADP MEGA-DEALER CLIENT WITH 14 STORES IN CALIFORNIA, OREGON AND HAWAII. Additionally, Republic Industries, the largest...

  • Page 14
    ... to support clients on a worldwide basis. Our clients include most of the major property and casualty insurance carriers and many of the independent A adjusting companies, nearly 13,000 collision repair centers, and more than 3,000 auto parts recycling facilities in the U. S., Canada and Europe...

  • Page 15
    ... 13%. In addition, market acceptance of EDEN ™ (Electronic Data Exchange Network), ADP HollanderÂ's electronic parts locating product for recyclers, reached an all-time high with more than 2,350 units in place. Integrated Medical Solutions (IMS), which reviews medical-related claims arising from...

  • Page 16
    ... than 25,000 Canadian employers use ADPÂ's employer services, making us the leading provider in Canada. We now serve over 22,000 payroll and HR clients in Europe. Today, one out of five major companies in Germany and one out of three in France are ADP clients. Overall ES European revenue growth in...

  • Page 17
    ... ALSO SUPPORTS OTHER ADP CLIENT SERVICE OPERATIONS THROUGHOUT EUROPE AND NORTH AMERICA. Already a major provider of automated estimating in the U. S. and Canada, Claims Services now offers an array of valuation and estimating services to We also provide ticket settlement services to travel agents...

  • Page 18
    ... outstanding Diluted shares outstanding Cash dividends per share Return on equity AT YEAR END: 884,200 278,900 $ 605,300 $ $ 2.04 1.98 296,878 310,411 $ .5125 20.1% Cash, cash equivalents and marketable securities Working capital Total assets Long-term debt ShareholdersÂ' equity $ 1,662,448 $ 608...

  • Page 19
    ... earned on funds collected from clients as part of the CompanyÂ's integrated payroll and payroll tax filing services. The pretax equivalent has been calculated at a standard rate of 6%. BROKERAGE SERVICES Employer Services Brokerage Services Dealer Services Other Consolidated $2,747 $2,275 $1,911...

  • Page 20
    ... and services; overall economic trends, including interest rate and foreign currency trends; impact of Year 2000; stock market activity; auto sales and related industry changes; employment levels; changes in technology; availability of skilled technical associates; and the impact of new acquisitions...

  • Page 21
    ... OF CONSOLIDATED EARNINGS AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES (In thousands, except per share amounts) Years ended June 30, 1998 1997 1996 Revenue Operating expenses General, administrative and selling expenses Systems development and programming costs Depreciation and amortization...

  • Page 22
    ...: Cash and cash equivalents Short-term marketable securities Accounts receivable Other current assets Total current assets Long-term marketable securities Long-term receivables Property, plant and equipment Â- at cost: Land and buildings Data processing equipment Furniture, leaseholds and other Less...

  • Page 23
    ...) Employee stock plans and related tax benefits Treasury stock acquired (6,640 shares) Debt conversion (42 shares) Acquisitions (1,513 shares) Net earnings Dividends ($.3875 per share) Other transactions BALANCE, JUNE 30, 1996 Employee stock plans and related tax benefits Treasury stock acquired...

  • Page 24
    ...36,175) 86,494 674,267 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of marketable securities Proceeds from sale of marketable securities Capital expenditures Additions to intangibles Acquisitions of businesses, net of cash acquired Other Net cash flows from investing activities (618,401) 550,405...

  • Page 25
    ... Service revenue, including software license fees, maintenance fees and other ancillary fees, is recognized as services are provided. In those instances where hardware is sold to clients as part of a bundled service offering, the gross profit on the sale of hardware and prepaid software license fees...

  • Page 26
    ... canceled its services contract with the Company, and, as a result, a client contract deposit was returned to the Company resulting in a non-taxable gain to net earnings of approximately $19 million. The Company began the process of restructuring the internal operations of the Brokerage front-office...

  • Page 27
    ...T E 7. PAY R O L L A N D PAY R O L L TA X F I L I N G SERVICES 4,460 8,485 10,015 26,856 29,770 32,722 As part of its integrated payroll and payroll tax filing services, the Company collects funds for federal, state and local employment taxes from approximately 315,000 clients, files annually...

  • Page 28
    ... actuarial principles. In addition, the Company has various retirement plans for its non-U.S. employees. The plansÂ' funded status is as follows: (In thousands) June 30, Funded plan assets at market value, primarily stocks and bonds Actuarial present value of benefit obligations: Vested benefits...

  • Page 29
    ... have various facilities and equipment lease obligations. Total rental expense was approximately $172 million in 1998 and $165 million in 1997 and 1996, with minimum lease commitments under operating leases as follows: (In millions) Years ending June 30, 1999 2000 2001 2002 2003 Thereafter (In...

  • Page 30
    ..., New Jersey, August 13, 1998 DIRECTORS AND CORPORATE OFFICERS DIRECTORS Henry Taub3 Honorary Chairman of the Board Chairman, ADP Executive Committee Josh S. Weston3 Honorary Chairman of the Board Arthur F. Weinbach3 Chairman and Chief Executive Officer Gary C. Butler President and Chief Operating...

  • Page 31
    ...Data Processing, Inc. One ADP Boulevard Roseland, New Jersey 07068-1728 (973) 994-5000 TRANSFER AGENT Deloitte & Touche LLP ADDITIONAL INFORMATION ChaseMellon Shareholder Services Overpeck Centre 85 Challenger Road Ridgefield Park, New Jersey 07660 CORPORATE COUNSEL The Form 10-K Annual Report to...

  • Page 32
    AUTOMATIC DATA PROCESSING, INC. One ADP Boulevard Roseland, New Jersey 07068-1728 (973) 994-5000